Department’s Strategic Plan & Budget Vote 16: consideration

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Labour

07 May 2007
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Meeting report

LABOUR PORTFOLIO COMMITTEE
8 May 2007
DEPARTMENT’S STRATEGIC PLAN & BUDGET VOTE 16: CONSIDERATION


Chairperson: Ms O Kasieyane (ANC)

Documents handed out:
Presentation by Department: Strategic Plan 2007-2010
Department’s Preliminary Annual Report: 1 April 2006 - 31 March 2007 [available later at www.labour.gov.za]

Audio Recording of the Meeting

SUMMARY
Dr G Standing had been asked by the Minister of Labour to review the current Labour policies in South Africa and he addressed the committee on key recommendations in that regard. He emphasised the relevance of being inclusive and bringing all groups into play.

The discussion centred on the preliminary report and the way the SETA’s were presently been managed. The under performance of certain SETA’s was discussed and a way forward in this regard was touched on by Dr Prinsloo. The role of JIPSA and NEDLAC was also considered.

MINUTES
Briefing by Dr Guy Standing on relevant Labour Market issues.
Dr G Standing (Professor) said that in 1995, then as Director of Research for the Presidential Labour Market Commission, a big volume of material had been produced and presented to the Cabinet. The key strategy that was laid out at that time in the report essentially said that in order to move forward in the labour market in South Africa a policy of regulated sections was required.

The Minister of Labour had asked if he would conduct a review on the Labour policies in 2007 and make recommendations. The current meeting was an opportunity to brief the committee on the thinking and to acquire feedback and guidance from the committee. A bipartisan perspective was being adopted from an economic and labour point of view. Important lessons that had been learnt in the time from 1995 to 2007 were being reviewed in perspective of the report of the previous recommendations that were made.

The essence of the report dealt with the Labour Relations Act and the Employment Equity Act in trying to be inclusive and bring all the social groups into play. The transformation had to be managed. In implementation, the number of sidelines had become a menace to the overall strategy.

Those highlighted were:
The promotion of the voice of all legitimate interests in South African Labour. Changes should be done through negotiations and institutions that allow the voice of all legitimate interests to play a part. Key challenge that the emphasis was on is that there had to be a flexible labour market but flexibility which did not involve a high cost for workers and low-income groups. The pain that would come with flexibility would have to be offset with the development alongside it of development of comprehensive social protection. One without the other was going to involve more inequalities. The structural inequalities from the apartheid era needed to be addressed. A twin strategy needed to be implemented since 95/96 as a guide as to what was happening. The impressions that were given were that there is a weakening “voice” and that it has become more fragmented and less representative in this time period. Business was fragmented as well.

More important are the marginal groups that have been left out of the institutions all together. The fundamental weakness of what had happened since 1995 was that the “voice” was not heard and there was a tendency to excessive legalism, excessive proceduralism with the accompanying delays and costs. The bureaucratisation had overtaken the systems. It was stressed that it is not too late to think of ways to strengthen voice institutions including the Commission for Conciliation, Mediation and Arbitration (CCMA) and codes of good practise and there are various ways to do it.

The low hanging fruit would be that the policy makers in society could reach consensus and there was enough low hanging fruit on which the people with goodwill could work. Recommendations could be made regarding that area. The middle fruit is the institutional tweaking that could take place to make sure that the groups on the margin of society are brought in more effectively and this is where parliament could play a role. The highest hanging fruit would be the parliamentarians themselves and they have the highest role to play.

The working communities of all levels would bear more insecurities in the labour market because of globalisation then an effective universal social protection system was needed as a matter of priority.

Policy should not be taken to serve the minority to the detriment of impoverished majority. The real challenge was to address the universal basic system while at the same time “tweaking” the labour market.

A strategy of reform for the integration of the social and labour markets should be developed and implemented.

Discussion
Mr B Mkongi (ANC) stated that the labour policy was flexible as it gave the role players confidence to participate in the process. Secondly he questioned the social security system in that the CCMA was under siege because the employers would use more expensive lawyers and the employees would have the less experienced representation. It was questioned as to what the lowest hanging fruit would be as the mechanism for dialogue between Labour, government and employers was the National Development and Labour Council (NEDLAC) and they had a role to play as a voice of the community and in policy formation.

Dr G Standing stated that in the report that was published that South African labour is very flexible against the foundation, which it is laid however rigidity had developed and a broad approach, needed to be taken. The social security system had to be extended on the foundation of basic economic rights. The majority could not be left out. In regard to the CCMA it needed to be properly funded as it was under funded and the caseload was three times more than was budgeted for. In effect it is an under funded “voice” body. Temporary employment services had to be regulated and the economic security improved.

Mr O Mogale (ANC) questioned as to whether a study had been taken around the issues of labour. The question of whether labour was over regulated or under regulated was asked.

Mr E Mtshali (ANC) stated that one could not be an economist without been political.

Dr G Standing (Professor) stated that he was a political economist and that the policies had to be assessed as objectively as possible. The positives and negatives of different reforms needed to be weighed up. The assumption in the debate was that labour was rigid. In China and India the similar question of over regulation was been discussed and figures for “jobless growth” were been put forward. The Governor of the Reserve Bank of South Africa had put forward reforms even if they may not have been needed, the reason was to be able to “sell” South Africa to the rest of the world with regards to the Labour issues.

In 2007/8 a sense of inclusiveness needed redefining and this could occur by the improvement of security and economic rights and by the increase in productivity and efficiency. In the economy social development and labour needed to be integrated. As stated in the report for the Minister of Labour the “voice” organisations recognition must improve.

Briefing by the Department of Labour: discussion

The Chair stated that the debate would take place the following Tuesday regarding the budget for the Department of Labour and that the Director General would be excused for the present discussion.

Mr Mkongi (ANC) questioned about the strategy discussion which was to have taken place and how the rules of Parliament would fall into that.

The Chair replied that that discussion would take place in the context of the workshop the coming Friday.

Mr G Tsemiwe (Department of Labour) responded by asking if the presentation would be put aside and the topics raised in the presentation be refreshed before the committee. Those topics covered were that of the Employment Equity report, Critical Skills and the Child Labour document. The Umsumbuvu Youth fund allocation and that of the ABET system was also raised.

The Chair responded by stating that the session could go straight into a discussion and that the budget vote was been tabled the following week in Parliament.

Mr Lowe (DA) questioned as to why the Preliminary report had not included further details on relevant issues.

Mr G Tsemiwe (DOL) replied that the Preliminary report was in preparation for the forthcoming budget debate and that the Annual report would be submitted later on in the year. This report was to assist the committee for the budget debate.

The chair stated that the strategic plan was up to 2010 and a sense of the plan from 2006/7 until 2010 was needed. More emphasis was needed to harmonise industry and labour policies, on this clarification was needed. The National Skills fund (NSF) was not reflected in the present plan. What was more important in the light of the goals that the NSF had set of committing 75% of the funds by March 2005/6 to skills development was that those funds had not been spent. Three of the Sector Education and Training Authorities (SETA’s) had had a qualified audit and there remained problems in many of the SETA’s.

Mr G Tsemiwe (DOL) replied that in the 2007-2010 strategic plan, employment creation was in the five-year plan from 2004-2009. The objective identified in the programme was that it was a three-year plan and it could be reflected only in the annual report. The role of the Department of Labour would be over a five-year period and the objective was to strengthen social development, to expand the public works programme and to achieve the learnership targets. The three-year strategic plan was going to be reviewed in 2009 and again at the end of the five-year period. In the plan for the period from 2007-2010 there were six priority areas. These areas included: increased service delivery and skills development, emphasis on critical and scarce skills, to strengthen the priority compensation fund, broaden the action of employment services and the integration of health and safety in the work environment. This would not mean that other areas would not be pursued at the same time.

Mr L Maduma (ANC) stated that once the finances had been committed the problem arose when the finance was needed for the projects. The commitments had been made and the flow of finance through intermediaries was the concern and the service delivery model needed to address the flow of money to the SETA’s and for the projects. Monitoring and implementation of the financial flow was a concern.

Mr Lowe (DA) stated that light needed to be shed on the money allocation for the SETA’s and intervention made into those SETA’s that were under performing. The strategic plan needed to include a plan for the SETA’s to see which were working and which were not. He asked if the Minister of Labour could address the committee concerning the SETA’s and what was to be done.

Mr Mkongi (ANC) expressed concern in the way the discussion was moving. Skills development and the under performance of the SETA’s was previously discussed. The priorities for the strategic plan were laid out and practicalities given on how this was going to be achieved. There was an inability to deal with the SETA’s as there had been investigations happening which also included some of the SETA’s investing in Fedenture. The dialogue had to be strengthened especially with NEDLAC. The challenge was integrated inspections.

Mr Mtshali (ANC) stated that it was a repetition of the report and that sustainable jobs needed to be created.

Ms Weber (DA) stated whether a solution of streamlining the process would be helpful as this was a bad reflection on the SETA’s and the unemployment rate was still very high.

Mr Mgale (ANC) questioned the inspections budget and stated that the inspectors leave to go to other departments. The strategic plan since 2004 included that of sheltered employment and again the turnaround strategic plan was submitted for 2007 however the target had not been reached. In addressing the Child Labour Programme why had the targets not been met in reducing this.

The Chair questioned the role of the inspectors and what would cause them to leave, she suggested the lack of resources, inadequate transport and possibly the salaries that they were been paid.

Mr G Tsemiwe (DOL) stated that although it appeared that the DOL was recycling information that this was not the case as the National Skills Development Strategy was a project over a five-year period and that this was a preliminary report and more detail would be in the annual report.

Dr Prinsloo (Proj leader: NSDS) stated that the National Industrial Policy Framework had to line-up with the Skills Development strategy and those changes had to be made in the current legislative framework. In 2004 this had been reviewed and all the SETA’s had been reviewed and there were six that needed a closer look of the 23 SETA’s. The training of artisans through learnerships in 16 different trades was been looked at and the targets reviewed as well.

The performance measurement systems that were put in place were working well in the Bank SETA (as this was a well structured sector), the Food and Beverage SETA, the Chemical SETA and financial services. The Agricultural SETA had merge with another SETA and this had proved a good decision to make. The Services SETA was also accomplishing good work. In 6 of the SETA’s there was a programme to consolidate and the finances of those were in the process of been sorted out. The reports would be given in July.

Mr Mogale (ANC) questioned as to whether there was duplication taking place between the SETA’s and JIPSA. Research needed to be done in this area.

Dr Prinsloo (Proj Leader: NSDS) replied that JIPSA was a short-term organisation and that its term would end in September 2007 unless it was renewed. The function of JIPSA was to identify the priorities in the 16 trades and also advise on the best use of the resources available.

Mr Lowe (DA) had a follow-up question in which he raised concern that the Director General was not represented in the discussion with regard to the strategic plan and that the other issues raised were not presented in the Preliminary report.

Mr Mkongi (ANC) expressed confusion and stated that JIPSA and the SETA’s should be a part of the debate in Parliament. A process of follow-up and engagement with the SETA’s and JIPSA should be followed.

The Chair expressed that the follow-up issues would be taken into account. The Strategy priorities for 2007 would the issue of skills development, Small medium micro Enterprises and employment creation.

Mr Mkalipi (DOL) answered on that the Child Labour Action Programme was presented to Parliament and before the strategy could be adopted the costing had to go through two other departments. The social cluster Director General needed to “buy-in” to the project and the challenge that was been faced was that this information on the costing had to be finalised by September 2007. Social dialogue was not present in the strategy and the first step was to review the process and review the structure.

Mr Matebesi (EM: Finance,DOL) stated that the budget for inspections was increasing and workplaces were not been reached however an increasing number had been inspected. There was a challenge for occupational health and safety and this issue needed to be integrated and competency reached. The draft policy would be finalised for cabinet.

Mr L Larson (Acting CEO, Service Products) stated that the target for the Sheltered Employment Products target for 2004/5 had not been met. Restructuring was occurring. A turnaround strategy was been implemented from January 2006. The implementation of that was a nine point strategy however due to capacity constrains they delivered as much as was possible in that regard. The sheltered employment structures had to be legally defined and this also required legislative en-ablement and these structures would then be listed as a government agency by 2008. The relevant structures needed to be put into place.

The Chair requested more information with regard to the NSF and when the case would be finalised that would enable them to become a legal entity.

Ms Moss (ANC) questioned as to how often a report would occur about the sheltered employment entity.

The Chair replied that this would be a quarterly one.

Mr Tsemiwe (DOL) replied that the listing of the NSF process was unfolding and that it would be listed as a public entity.

Mr Mkongi (ANC) questioned whether there would be a positive or negetive impact on the resolutions of the review of the NSF.

The Chair thanked the delegation and stated that more had to be dealt with before the budget debate that was occurring on the 17 May. She stated that the Director General had agreed for training to take place with regards to the Employment Equity Act and Skills Development Act. The members would be informed of upcoming dates.

The meeting was adjourned.

 

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